t week, while clicking about the television channels, I came upon a news broadcast highlighting a Federal Bureau of Investigation (FBI) sting that nabbed the members of a San Diego-based mortgage fraud ring.[/b] The arrests were clearly orchestrated for full media coverage, with a number of miscreants hauled off in handcuffs in full view of the TV cameras. Some of the fraudsters were literally caught sleeping – the early morning raid found a few of them still in their pajamas! While I am glad the FBI is still maintaining a sense of media savvy, I am more impressed that mortgage fraud investigations have not slipped off the federal law enforcement radar. After last summer's heavily publicized Operation Malicious Mortgage, it appeared the feds were taking their time in staging a camera friendly encore. A new report from the Mortgage Asset Research Institute (MARI) contained a line that should make everyone in the industry shudder: ‘Reported mortgage fraud is more prevalent now than in the heyday of the origination boom.’ Even worse, fraud is bubbling up in areas where it was previously not a major concern. Perhaps the most unexpected factor of the report was the leader in mortgage fraud: Rhode Island, the nation's smallest state. Even MARI was surprised, noting the Ocean State's harvest of reported fraud was ‘more than three times what we would expect, based solely on its origination volume.’ As for the rest of the mortgage fraud top five: Florida, the previous year's leader, came in second place, followed by Illinois, Georgia and Maryland (another new player in the top-five fraud listing). Despite a drop in origination volume, reports of mortgage fraud are rising. In some ways, this is a reflection that the industry has done a good job in being vigilant to funny business. There is a huge difference between fraud being reported and caught before damage is done (which is happening today) and fraud going undetected until it is too late (which is what helped to speed the current crisis). Yet the spike in mortgage fraud is clearly a reflection of today's troubled situation. In a recent interview with [b][i]Secondary Marketing Executive[/i][/b], Charles R. Geisst, professor of finance at Manhattan College in the Bronx, N.Y., and author of the prescient 2004 book ‘Undue Influence: How the Wall Street Elite Puts the Financial System at Risk,’ stated that the rising fraud levels were the result of a souring economy. ‘It is a sign of the economic times,’ he says. ‘When times get tough, people will lie or commit fraud, although they may not think it is fraud. People are aware it's tougher to get a mortgage. For that reason, they would lie.’ And for that reason, too, mortgage fraud investigations need to remain a very high priority within the federal law enforcement agencies and at the Departments of the Treasury and Housing & Urban Development. Granted, there have been much higher profiles in financial chicanery that have occupied the attention of Washington, the media and the general public – most notably the Bernard Madoff swindle, the dubious bonuses for the American International Group executives and the questions of how the bailout/rescue funds are being spent. There were no recognizable names in last week's FBI sting, and its scope was limited to the San Diego market, so there is good reason to worry that the brief flurry of attention given to that sting will be quickly forgotten. But even if the public and the media move on to other stories, I hope that the feds will keep the mortgage fraudster in their viewfinders. For too long, this criminal activity was not pursued with any degree of urgency. While the feds may be a little late to the party, their belated input is more than welcome. On an unrelated matter: MortgageOrb is now on Twitter. Please check us out at www.twitter.com/MortgageOrb. – Phil Hall, editor, [b][i]Secondary Marketing Executive.[/i][/b] [i](Please address all comments regarding this opinion column to firstname.lastname@example.org.